How to get pre-qualified for a mortgage
The process of getting pre-qualified is similar to getting a pre-approval; however, getting pre-qualified for a home loan is not as involved as getting pre-approved.
For example, to pre-qualify for a home loan most lenders do not require the borrower show documentation such as W-2s, tax returns, proof of income, proof of debt, proof of employment, etc.
A mortgage pre-qualification is a rough estimate of the loan amount you might qualify for, whereas a pre-approval provides an exact amount based on a specific interest rate.
The first step to getting pre-qualified for a home loan is to find a lender. Different mortgage lenders may offer similar types of mortgage loans and yet offer different mortgage rates and terms. Therefore, it’s a good idea to talk to several lenders.
At Credit Union of Southern California (CU SoCal), we make getting a mortgage easy!
Call 866.287.6225 today to schedule a no-obligation consultation and learn about our mortgages, home equity lines of credit, auto loans, personal loans, checking and savings accounts, and other banking products. As a full-service financial institution, we look forward to helping you with all your banking needs.
Read on to learn more about how to pre-qualify for a home loan.
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What is a mortgage pre-qualification?
A mortgage pre-qualification is a rough estimate of a loan amount you could potentially qualify for. The pre-qualification requirements are simple, and many lenders even offer quick online pre-qualification.
To get pre-qualified you don’t need to provide documentation of income, debt, or assets. You only need to provide the lender with your name and your approximate income and debt amounts. The mortgage lender may also ask for permission to view your credit score.
According to
myfico.com, most people’s credit scores are not affected by multiple inquiries from mortgage loan inquiries made within a short period of time. So, if you are shopping for a lender you may get pre-qualified from several lenders.
A mortgage pre-qualification is not a binding agreement and you may get pre-qualified by more than one lender.
Pre-qualification mortgage calculator
Thinking of buying a home? This
Mortgage Qualifier Calculator provides an estimate of your monthly payment and will help you determine how much you can spend on a new home.
Try it now and see how much you may qualify for.
Pre-qualification requirements
Each lender has unique documentation requirements for issuing a mortgage pre-qualification, so some lenders may want to see documents, while others will ask for “stated” information. Either way, if you are serious about applying for a mortgage and being pre-qualified for a home loan, it’s better to be prepared to provide more information.
Pre-qualification requirements may include:
- Stated income
- Down payment amount
- Basic savings account information
- Credit check, in the form a “soft pull” which will not affect your credit score.
Getting pre-qualified for a home loan
The process of getting pre-qualified for a home loan is straightforward:
- Check your credit score. According to the credit bureau Experian, a credit score of 620 or higher is typically needed for a conventional mortgage. Some government mortgage programs require a credit score of at least 580. Get your free Annual Credit Report.
- Know your debt-to-income ratio (DTI). This ratio tells the lender if you will be able to financially afford to take on the new debt of a mortgage loan. If your current debt is very high and your income is not sufficient to cover new debt, you could be turned down for a mortgage. To calculate your DTI ratio, add all your monthly expenses (debt payments) and divide that number by your gross monthly income (before taxes). Lenders prefer a DTI under 36%.
- Calculate your down payment. Have you saved money for a down payment? The higher the down payment you can make, the lower the loan amount you’ll need. You may also be able to use gift funds as a down payment.
- Shop different mortgage lenders. Mortgage pre-approval is available from many types of lenders, including credit unions, banks, and online lenders. However, it’s always smart to start the process by speaking with the financial institution where you currently have an account. You may qualify for special interest rate promotions or fee discounts.
- Apply for pre-qualification. Some lenders will require you to complete an application, while others may simply take your information verbally on a call.
- Receive pre-qualification letter. If you qualify, the lender will send you a pre-qualification letter that you can share with your real estate agent and home sellers, to let them know you are a serious shopper.
Why savvy consumers choose CU SoCal
For over 60 years CU SoCal has been providing financial services, including mortgages, Home Equity Loans, HELOCs, car loans, personal loans, credit cards, and other banking products, to those who live, work, worship, or attend school in Orange County, Los Angeles County, Riverside County, and San Bernardino County.
Please give us a call today at 866.287.6225 today to schedule a no-obligation loan consultation with a CU SoCal Member Services specialist.
Get Started on Your Mortage Today!